Anheuser-Busch InBev (NYSE:BUD) sales volumes and earnings growth in the past quarter gives JPMorgan more confidence in the stock.
Yesterday, AB InBev shrugged off the ongoing Bud Light boycott to cruise past market estimates as higher prices meant record revenues in a score of markets.
JPMorgan called it a "solid" first quarter and raised its full-year earnings forecast 3%, saying the brewer has the best EPS growth of 16%-plus in the European staples sector.
"Volumes were marginally better underpinning our confidence in the volume recovery for FY24", the bank said, with profit margin also stronger notably in the US and EMEA, both of which "should continue to benefit" from an easing cost of goods sold environment throughout the rest of the year.
Overall ABI is seen growing organic sales 4.1% this year, with volumes up 0.3% supported by improved trends in Middle Americas, EMEA and Brazil, while price/mix should be supported by further pricing growth of around 3.8%.
Organic EBITDA growth is seen rising 8.0%, at the top end of the company's guidance of 4-8%, while adjusted EPS forecast are raised to $3.53.
"Overall, we see the strong EPS growth as supportive and expect shares to also benefit from further deleveraging with upside from acceleration of cash returns, which could offset market worries of further placing from Altria."
Strong momentum in the beer segment in 2024, even if recent weather trends have been less helpful, means JPMorgan's preferred stocks in the sector are ABI and Heineken, both rated 'overweight'.